July constructsteel newsletter

US home building surged in May, climbing 21.7% from April, as low inventory in the existing home market continued to boost interest in new homes. Housing starts, a measure of new home construction, came in far beyond expectations that they would decline by 0.1%.
The number of units rose in May to a seasonally adjusted annual rate of 1.631 million, above expectations for 1.40 million and above the revised April estimate of 1.34 million., is expected.

A body representing contractors in the United States warns that incoming regulations on the provenance of construction products and materials could lead to further price rises in the sector. Build America, Buy America Act (BABAA) requires all iron, steel, manufactured products, and construction materials permanently installed on federally assisted infrastructure projects to be produced in the US. The law is currently in effect, but from a functional and legal standpoint, the regulations have yet to be finalised.

UK construction output fell 0.6% in April 2023, raising concerns about demand for work. The total construction industry output fell by 0.6% in April 2023, following two months of consecutive growth. This decrease in monthly output could be attributed to a decrease in new work (1.0% fall) and a small offset from increased repair and maintenance (0.1%) during the month.

The Connecting Europe Facility (CEF) announced additional financial support of EUR 6.2Bn for 107 new projects on the Trans-European Transport Network (TEN-T). The funding will be targeted toward transport infrastructure projects that align with the EU’s climate objectives. Including the construction of railways, inland waterways, and maritime infrastructure across the European Union, the support will extend to cross-border connections with Ukraine and Moldova through the establishment of Solidarity Lanes.

German engineering companies’ order books fell significantly in April, reversing the prior month’s figures. April orders were 20% lower compared with the same month last year, with domestic orders down 15% and foreign orders down 23%. By comparison, there was a 6% drop in orders in March, the first month since September 2022, with a single-digit decline. The German economy was in recession in early 2023 after household spending in Europe’s economic engine finally succumbed to the pressure of high inflation.

Wall Street banks have warned that China’s real estate slump is expected to persist for years, posing a threat to the broader region. The banks anticipate a slow and prolonged recovery in the property sector. Further weakness in the sector is likely to hinder China’s economic growth and could have spillover effects on neighbouring countries in the Asia-Pacific region.

Indonesia’s state-owned enterprises’ ministry plans to top up equity investments in two construction firms by 30.5 trillion rupiah (USD 2.05Bn) by 2024 to help ease companies’ financial troubles. The government wants to inject 12.5 trillion Rupiah (USD 840Mn) by early 2024 into Hutama Karya, which is fully owned by the government so that it could take over two toll road projects from builder Waskita Karya.

The Tanzanian government plans to build a 50km bridge, the longest in Africa, between Dar es Salaam and the island of Zanzibar. The government has estimated the bridge would cost USD 2.7Bn to construct, and it intends to procure the work through a public-private partnership, with some funding to come from the African Development Bank. The bridge would improve trade, tourism, and investment opportunities in Zanzibar and the mainland.

Construction input prices posted a 0.6% decline in May, marking the third consecutive month of reduced costs, while nonresidential construction input prices dropped 0.5%. Construction input prices are 3.7% lower than a year ago and continue to fall. However, much of that drop is tied to energy, steel, and softwood. Concrete prices moved up 1.1% in May and jumped 12.4% for the year. Further, steel mill products jumped 5.2% in May, following a 3.6% rise in April, while the rise in concrete products prices was the 30th consecutive monthly increase.

Investments in construction technology surged 85% between 2020 and 2022 to USD 50Bn, as the number of deals in the industry grew by 30% to 1,229.
While the metrics show the continued potential for digitising the USD 12Tn construction industry globally, hurdles, including the fragmentation of industry players, slow technology adoption, and roadblocks to scaling products that solve problems for multiple customers, continue to stymy more growth in the sector.

A rebar-tying robot recently helped to boost productivity and worker safety on a bridge project in Wisconsin. TyBOT accomplished 17,823 ties in two shifts in late April across a 7,775-square-foot area. The machine ties reinforcing steel at a rate of over 1,100 ties per hour per release.

New Hospital Nordsjælland in Denmark, which has been under construction since 2019, is using artificial intelligence site monitoring software from Imerso, a Norwegian start-up, to improve work productivity and avoid unnecessary costs due to human error. Imerso is a software platform that combines BIM, reality capture, and AI technologies to automate construction site supervision and quality inspections with one simple workflow. The system helps construction companies to cut project risks and avoid costs with real-time monitoring of site status and work quality.

The Romanian government is expected to pass a state aid scheme for the construction materials industry, with a total budget of EUR 150Mn (USD 163.2Mn) from the state budget. The target is to increase construction materials production by 10% and close the trade gap in the sector. At the same time, it is expected to create 20,000 new jobs. A single beneficiary will be able to obtain funding of up to EUR 50Mn (USD 54.4Mn) but no more than 75% of the project’s value.

India’s finished steel purchases from China touched a five-year high in April, and the country’s overall imports of the alloy reached a four-year high. In April, China emerged as the second-biggest steel exporter to India by shipping out 0.1 million tonnes, up 79% year on year. Imports from China accounted for nearly a quarter of India’s overall finished steel imports in April. India imported 0.5 million tonnes of finished steel in April, the highest since 2019, up 38.2% from a year earlier.

Egypt’s steel production has slowed since the beginning of the year as a result of a foreign currency shortage and a decline in local demand. Egypt faced a decline in production due to the accumulation of raw materials in ports and delays in customs releases caused by the scarcity of US dollars. Some companies and factories within the industry have closed or decreased their production.

Saint-Gobain entered into a definitive agreement for the acquisition of Building Products of Canada Corp, a privately owned manufacturer of residential roofing shingles and wood fiber insulation panels in Canada, for CAD 1,325Mn (USD 1000Mn).

Holcim announced the acquisition of Minerales y Agregados, an advanced mortar and adhesives producer in Guatemala. Minerales y Agregados will represent Holcim’s first production facility in Guatemala, while expanding the region’s Solutions & Products range with a new line of business.

TopHat, the UK-based manufacturer of prefabricated houses, formed a partnership with French housebuilder Nexity to accelerate the development of off-site construction in France. The partnership would involve TopHat contributing its references in modular construction while Nexity will provide knowledge of the French market for off-site construction. Nexity aims to have 10% of its housing production completed in factories by 2028.

Laing O’Rourke will be cutting 200 jobs in the UK. Since the pandemic, the UK market has weakened and the company has seen delays to some of the major public works it geared up for, therefore, it will be reducing its operating costs, while continuing to deliver projects and protect the ability to invest in the technology and innovations that will transform construction.

State-owned China Communication Construction Company (CCCC) signed a USD 166Mn contract with The Kenya National Highway Authority (KeNHA) to construct a 453km road in the Lamu Port South Sudan–Ethiopia Transport Corridor (LAPSSET). This road is part of a megaproject linking Kenya with Ethiopia and South Sudan.

South Africa-based mining and materials company, Afrimat acquired Lafarge South Africa Holdings (LSA). The deal includes all the subsidiaries of the LSA Group, which will become part of Afrimat’s Construction Materials division.

LSA Group, a member of the Holcim Group, currently supplies a range of products to the construction industry, including cement, concrete, aggregates, and fly ash. The purchase price for the acquisition of the equity in the LSA Group is USD 6Mn, with an additional ZAR 900Mn (USD 48.97Mn) towards repayment by or on behalf of LSA of an amount owing by LSA to the Holcim Group.